Oakland OKs City-Licensed Marijuana Farms

Growing operations to be heavily taxed and regulated

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OAKLAND, CA - JULY 22: Marijuana plants sit on a shelf at Coffeeshop Blue Sky cannabis dispensery July 22, 2009 in Oakland, California. Voters in Oakland, California overwhelmingly approved a measure during a vote-by-mail special election for a special tax on sales of medicinal marijuana at the city's four cannabis dispenseries. The new tax rate of $18.00 per $1,000 in sales, up from $1.20 per $1,000, will generate an estimated $294,000 for the financially strapped city. (Photo by Justin Sullivan/Getty Images)

Oakland has moved closer to becoming the first city in the nation to authorize wholesale pot cultivation. The Oakland City Council voted 5-2 with one abstention late Tuesday in favor of a plan to license four production plants where marijuana would be grown, packaged and processed.

The vote came just after midnight following a seven-hour meeting and more than two hours of public comment, with speakers divided between those who opposed the measure -- largely on the grounds that it would put small medical marijuana growers out of business -- and those who said it would generate millions of dollars for Oakland in taxes and sales and create hundreds of jobs.

The plants would not be limited in size -- one potential applicant for a license wants to open a plant that would produce over 21,000 pounds of pot a year -- but they would be heavily taxed and regulated.

Those vying for one of the four licenses would have to pay $211,000 in annual permit fees, carry $2 million worth of liability insurance and be prepared to devote up to 8 percent of gross sales to taxes. The massure is expected to pull in $5 million - $8 million in taxes per year for the cash-strapped city and create at least 1,000 jobs by the time it's up and running.

Proponents of the measure also touted the possibility of Oakland becoming the nation's cannabis capital, especially if California voters approve the legalization of recreational marijuana in November.

"Do you want to be the "Silicon Valley of Cannabis?" said Jeff Wilcox, a local businessman who wants to build "AgraMed," a 7.4-acre plant with a bakery, a lab and 100,000 square feet of cultivation space.

But Stephen DeAngelo, executive director of Harborside Health Center, the largest medical marijuana dispensary in the world, said small growers were coming to him terrified that the ordinance would mean the end of their livelihoods.

One of the co-sponsors of the ordinance, Rebecca Kaplan, said the ordinance would not take effect until January, giving the council time to come up with a plan for medium-sized growers.

Councilwoman Nancy Nadel said she worried about quality of the product, wanted environmental protections and questioned why the council was voting on the measure now if it wasn't going to take effect until January.

The measure will go before the council one more time for a final vote, but the outcome isn't expected to change.